If the Interest Rate Is 7 Percent on Euro-Denominated Assets

question 45

Multiple Choice

If the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets,and if the dollar is expected to appreciate at a 4 percent rate,the expected return on ________-denominated assets in terms of ________ percent.

• A)dollar;euros is 3
• B)euro;dollars is 1
• C)dollar;euros is 9
• D)euro;dollars is 11

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